Is the U.S. Too Big to Fail?

We have heard from the Obama administration that companies like General Motors or various major banks are simply “too big to fail”—a mantra whose meaning is ambiguous. On one interpretation, the sense is that such enormous enterprises, owing to the fallout attendant upon their collapse, should not be allowed to fail and need to be propped up by vast infusions of cash. At the same time, the implication is that what we might call “maximal structures” generate their own survival momentum, and while some tweaking here and there may prove beneficial they will continue to lumber on regardless. We must, it seems, have confidence in the incommensurably large. We must believe that what is “too big to fail” will either not fail or will not be permitted to fail

Analogously, we have been instructed that countries, unlike individuals and certain corporations, are too big to go bankrupt. Walter Wriston, former director of Citibank, is a firm believer in the fiscal resilience of nations. This is no consolation, however, to the people of Zimbabwe today or the citizens of Argentina between1999-2002 during the great economic meltdown. Christopher Booker and Richard Fernandez warn that Britain is on the verge of crashing: the accumulating debt to GDP ratio is frankly unsustainable. When the welfare cheques stop coming, when inflation goes through the roof, when banks invest in padlocks, when essential services are no longer provided and salaries are a fond reminiscence, a nation is effectively in bankruptcy—which is merely another term for failure. The French word for bankruptcy says it all: faillite.

There are, of course, many ways for a nation to approach the tipping point of potentially irreversible miscarriage. Economic implosion, as we have seen, is one; defenseless borders in times of conflict are another; unchecked immigration leading to ballooning social costs and a dilution of civic sentiment, as well as internal subversion, is a third; a flaccid, poorly educated and self-indulgent public unwilling to embrace austerity when necessary or bestir itself to the preservation of the polity is yet a fourth. Taken together, these factors amount to a perfect storm that will bring even a colossus to its knees.

Size in itself has nothing to do with viability. In fact, some things may be too big not to fail. The Roman Empire was pretty big and so was the Muslim imperium, but their long and undoubted success was the precondition for their inevitable collapse. Such dromocratic constructs tend to grow topheavy or the lines of communication between center and periphery weaken and fray. They peter out from misrule, debauch, apathy or torpor, or succumb to invasions and repeated military defeats, their scope and volume notwithstanding. This is also the case for more coherent entities. Classical Athens was a political and civic triumph until it began to expand far in excess of the optimal polis census of 5000 freeborn citizens.

But why stop there? By all accounts, the universe is a rather big place, but cosmology informs us that it will either dilate toward inescapable death by entropy or will reach a point when it begins to reverse its expansion, leading to a “big crunch.” “Either way,” as the Greek tragedian wrote in the Oresteia, “ruin.” If the universe can “fail,” then, presumably, anything can, irrespective of magnitude.

Which brings us to the United States of America, considerably smaller than the universe but large enough to inspire assurances of invulnerability among those inured to the lessons of history or given to intellectual complacency. The Bridge Mix of social, political and economic programs—redistribution of wealth, a bloated bureaucracy, reduction of military power, amnesty for illegals, toleration of inimical communities, government takeover of the marketplace, ideology supplanting pragmatics—adopted by the American liberal-left and rapidly being put in place by the current administration are hurtling the nation toward its moment of truth when it will have to decide whether it survives as the United States of America or devolves into something that, until just a few years ago, would have been almost unimaginable.

Often what seems to be inconceivable is only the prelude to what may well become unavoidable. And in the case of America such a scenario is all too possible. For America has only three options looming before it in a rapidly foreclosing future. The best case scenario is that, assuming a concerned citizenry, the growing Tea Party movement, a return to strict budgetary rectitude and a revival of the wisdom of the Constitution and the Founders, the United States may weather the storm of social and political dismemberment it is presently undergoing and recover its essence as a constitutional republic. To accomplish this aim, however, the policies of the Obama administration must be resisted at every turn. What Henry David Thoreau wrote in On the Duty of Civil Disobedience in 1848 has a proleptic ring to it and is truer today than it ever was: “How does it become a man to behave toward this American government today? I answer that he cannot without disgrace be associated with it.”

On the other hand the calamity of disintegration, as happened to the Soviet Union not so long ago, is a deeply troubling likelihood. The drive toward secession or what is called “disunion” along red state/blue state lines appears to be acquiring strength by the day. It is in the air. The threat of dissolution cannot be wished away or conveniently ignored. Whether such a parting of ways can be achieved peaceably and rationally or would entail violence and bloodshed remains an open question. But what resembles a bitter marriage between cultural incompatibles, the statist Left and the conservative Right, who have nothing to say to one another and disagree on just about everything, makes an eventual divorce by no means unthinkable. The clash between a pervasive scavenger mentality of collective entitlement and the ancestral belief in the values of personal initiative and individual responsibility cannot, it increasingly appears, be resolved amicably.

The third possibility is that America under the stewardship of Barack Obama and the Democratic Party will become an impoverished, socialist, Muslim-friendly country, much like the United Kingdom today or Sweden tomorrow, with devastating consequences for the majority of its citizens. As David Horowitz remarks of the U.S., “its constitutional order is threatened by a political left whose values remain socialist and whose agendas are subversive.” Such is the fundamental transformation promised by the Democratic candidate five days before his election: the intent to legislate outcome at the expense of input, to ensure a syndicalist homogeneity of status among the population while installing a privileged managerial class in the seats of power, and ultimately to transform America’s most industrious entrepreneurial sector into over-taxed and over-regulated obsolescence. Where have we seen this before?

These, then, are the three alternatives between which America will have to choose: recovery, dissolution, socialism. Regarding the latter two, to cite Aeschylus once more, it’s “either way, ruin.” Clearly, the moment of decision is not far down the road. Even a one-term administration for Barack Obama and his cohorts may be sufficient to wreak irreparable damage; a two-term presidency would probably spell the end of the noble and unique American experiment in republican democracy. For there can be little question that Barack Obama and the Democratic ascendancy together form the single greatest disaster to befall the United States in the modern era. If the country does not right itself sooner rather than later, it will find itself broken down the middle or wake up one day to discover that it is now nothing more than another socialist or quasi-Marxist Republic, which is a republic in name only.

Thoreau is on the mark again. Deploring the effects of a “wordy” and ever-compliant Congress which had “not yet learned the comparative value of free-trade and freedom” and which was devoid of “talent for comparatively humble questions of taxation and finance, commerce and manufactures,” he argues that without the “seasonable experience…of the people, America would not long retain her rank among the nations.” And we remember, too, that the United States was a much smaller political entity in 1848 than it is in 2010.

Now is not the time to take refuge in the smug conviction of indestructibility. America is not too big to fail and it may well be too big not to fail. But one thing is undeniable. As it approaches the eleventh hour, its survival depends on a determined and informed citizen “army” of genuine patriots capable of restoring the practical ideal of limited government and of conserving the proper balance between the state and the nation, the governors and the people, the collective and the individual, equality and liberty. Should that come to pass, America may recoup its forfeitures and at least partially retrieve the grandeur of its heritage.

And this, it goes almost without saying, is the real meaning of hope and change.

This is the most logical and convincing editorial on the state of America that I have read, and believe me, I have read a lot! If this does not wake up Americans to the state of emergency that we are in as a "sovereign" republic, I do not know what will. Thank you for your convinc-
ing arguments for why the conservative grassroots movement is so public. We know we have too much to lose to stay politely silent while the progressives push us over the cliff. I'd like to hear more from you, David Solway. Thank you. – Bonnie Lee, from California

rbla

Dissolution may indeed be inevitable. But if there is enough public support to make such an outcome feasible, I would suggest one desperate attempt at an alternative. A "producers union" followed by a general strike. If even a third of those who actually make the nation work were to not show up for just one week, a most salutary shock would be administered to our pompous and complacent governing elite. Call it a "week without Americans."

poptoy

With the Kenyan in control he could sink anything but a Muslim country.

Dennis / Tampa

THERE IS NO WAY TO RULE INNOCENT MEN…in ATLAS SHRUGGED, this concept was brought forth. In the U.S. today, innocent men are forced to defend their means to earn a living. Innocent men are subject to the "Cautionary Principle" … a legal fiction applied to a subjective evaluation of potential harm…think the rule breaker and you will be found guilty. Innocent men can no longer speak their minds, especially in religious context, if they are not members of a favored religion. Innocent children are being inculcated in doctrine, not knowledge. Innocent men are forced to pay for the scientific myths of influential politicians, the lack of ambition of other men, the business failures of the less responsible, and the profligate spenders of unjustly taken taxes.

I BID YOU STAND MEN OF THE WEST!

Syd Barrett

I with you there, Dennis.

Assuming there are still MEN in the west. Not the watered down, wussified, hand-wringers that liberals try to turn men into. But real, honest-to-goodness MEN, who know how to stand up for what is right and what is moral.

This is the precise reason that leftists have spent these past few decades womanizing boys in school. In preparation for just such a day.

Let me preface this next sentence by saying that even though I use the handle "Syd Barrett," I am a woman. And I say: Men, take charge! Take ownership of your God-given role! Stand up for God's laws and we will all be happier, healthier and more successful. Do NOT let feminists try to tell you how to be men.

USMCSniper

There were tens ipon tens of thousands of businesses in the harness and saddles, blacksmiths, buggy whips, carriage, horse feed, and livery stable industry in 1890, and they all failed due to the horseless carriage. Thank God, because it got rid of the tons of steaming horse manure and swarms of flies in the streets.

I still have hope that we can turn this around, but it all depends on how the government reacts to the next crisis. At some point a chain of events will force Obama's hand: The Fed's infusuion of dollars will cause inflation that takes many by surprise; the bond market will force the hand of the ratings agencies to downgrade US treasuries to junk bond status and annual deficit will adjust upward to reflect the higher interest payments on our borrowing. The dollar's steady fall will be accelerated when China is forced to sell dollars as the EU and OPEC are forced to adopt a basket of currencies to delink the price of oil from the dollar. The stock market will collapse once people realize we went over the cliff.

Jim C.

A few points: Are conservatives, then, serious about the influence of big corporations on big government? Do they understand the implications for our individual liberty that continuing to accord the same rights to corporations that we as individuals inherently posess?

It's all well and good, now that the bailouts have worked, to complain about them without thinking of the state of affairs that led to them or to imagine what it might have been like to have another Depression at this point in history?

One more point: the Constitution IS "big government." We are a huge, massively diverse nation. It's not ever going to go back to the old days of WASP-y consensus. Ever. But I agree that as citizens we should be ever vigilant and hold our elected leaders accountable, particularly for all the powers they've accorded to unelected leaders in both the public AND private spheres.

USMCSniper

A mixed economy is a mixture of freedom and controls—with no principles, rules, or theories to define either. Since the introduction of controls necessitates and leads to further controls, it is an unstable, explosive mixture which, ultimately, has to repeal the controls or collapse into dictatorship. A mixed economy has no principles to define its policies, its goals, its laws—no principles to limit the power of its government. The only principle of a mixed economy—which, necessarily, has to remain unnamed and unacknowledged—is that no one’s interests are safe, everyone’s interests are on a public auction block, and anything goes for anyone who can get away with it. Such a system—or, more precisely, anti-system—breaks up a country into an ever-growing number of enemy camps, into economic groups fighting one another for self preservation in an indeterminate mixture of defense and offense, as the nature of such a jungle demands..

Jim C.

OK. But I don't know that you can have a system that is otherwise and still keep a unified sovereign nation? What would your example be? There has to be some protection of the public interest–whether you are talking safety/health issues, national security, or economic stability. This, in addition to the enforcement of contracts.

Rochmoninoff

Jim C,
the 'big corporations' you seem to fear so much are in bed with our curent administration: Goldman-Sachs, UAW (which has supplanted GM), Fannie-Mae, Freddie-Mac, GE.
These mega-corps LOVE regulation. Sure it makes life harder for them, but it makes life IMPOSSIBLE for the competition.

Your "cure" is killing us.

I REJECT the central idea of the welfare state: that it is the job of the state to take care of its citizens.
Rather I CELEBRATE the idea that the state should provide and opportunity where citizens can succeed (or fail!) on their own merit. With the absolute minimum of interference.

Jim C.

I agree with your first paragraph–it has ever been thus, and moreso in the last 30 years. So how to "unrig" this game?

Jim C.

You do exaggerate a bit. The mega-corporations spend an awful lot on lobbyists to prevent regulation, which also gives them advantages over the little guy. Coincidentally–this is precisely the thing which caused the original tea party–the advantages the East India Company enjoyed over the American tea merchants who were bilked to provide that advantage.

http://maxentropy.squarespace.com Bruce

"These mega-corps LOVE regulation. Sure it makes life harder for them, but it makes life IMPOSSIBLE for the competition."

Yes indeed. It's called Fascism. An untenable partnership wherein private industry accedes to government dicktate to get government contracts. Mussolini notably implemented the practice but a coalition of unions and fumbling bureaucrats is a losing proposition as history has shown.

http://www.tartanmarine.blogspot.com Robert A. Hall

I've expanded my essay into a short book:

The Coming Collapse of the American Republic
And what you can do to prevent it
by Robert A. Hall

It’s available on Amazon: http://www.amazon.com/Coming-Collapse-American-Re…
100% of the author royalties from this book go to the Injured Marine Semper Fi Fund to help wounded troops and their families. I think the book’s subject is vital to the future of our country, and I wanted to be free to promote it without the suggestion that I was only doing so for pecuniary reasons.

It's a very short book, just 80 pages from the Introduction to the Conclusion, plus an additional 26 pages of resources and references for the citations in the book.